Boeing to cease production of 717

Boeing plans to recognize pre-tax charges totaling approximately $615 million, or $0.48 per share, related to the U.S. Air Force 767 Tanker program and expenses incurred to end production of the 717. The charges are to be incorporated in the company’s fourth-quarter and full-year 2004 results, scheduled to be released on Feb. 2, 2005.

The charge related to the initial production of aerial refueling tankers for the U.S. Air Force is approximately $275 million pre-tax, or $0.21 per share, including expected supplier obligations. No decision has been made on the potential phase out of the 767 line.

Another charge of approximately $340 million pre-tax, or $0.27 per share, is attributable to a decision to conclude production of the 717 commercial airplane in 2006 and includes expected supplier termination charges. Most of the cash expenditures related to the charge and an additional $45 million of period expenses associated with the shutdown are expected to occur in 2005 through 2007.

“The 717 brings tremendous value to the airlines that operate it. Unfortunately, the overall market for the airplane does not support continuing 717 production beyond delivering on our current commitments,” said Boeing Commercial Airplanes President and Chief Executive Officer Alan Mulally. “We extend our appreciation and gratitude to all our employees, customers and partners who worked so well together on the 717. The moving production line pioneered on this airplane will be a lasting legacy across our current and future airplane programs.

“As with all Boeing airplanes, we will continue to provide exceptional customer support for 717s in service for many years to come. And Boeing will continue to compete aggressively with our popular 737 Next Generation family of airplanes, which serves the 100- to 215-seat market,” added Mulally.

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